Firm strategy and financial performance: What is the role of sustainability? Evidence from the banking system of an emerging market

During the pandemic, all countries of the world were affected by a health pandemic was the largest in the twenty‐first century, which affected the performance of companies and put them in a difficult situation with the escalation of uncertainty. Our study evaluates the impact of the COVID‐19 pandemic on firms' financial performance and the moderating role of environmental, social, and governance (ESG) performance in this relationship. Based on a large international panel dataset that includes nine countries from G20 extracted from the Thomson Reuters EIKON database for the period from 2016 to 2021, a set of statistical analyses was applied, including descriptive statistics, correlation matrix, fixed effect regression, and robust regression using GMM model. The findings indicate that the pandemic negatively affected financial performance significantly, while the performance of ESG limits this effect. Thus, companies engaged in ESG activities are the least affected during the pandemic. Fulfilling stakeholders' demands enhances companies' performance during crises and corporate directors' resort to maintaining the performance of ESG as one of the effective strategies during the crisis to reduce the impact of COVID‐19 on financial performance. This study shows that compliance with ESG issues can mitigate negative financial impacts during crises and that while implementing ESG practices is costly, it satisfies stakeholders and generates financial gains for companies. Theoretically, we directed the theoretical lens to research through crisis and stakeholder theories to explain events.

Section: Resultssupporting

confidence: 92%

Section: Theoretical Frameworkmentioning

confidence: 99%

COVID‐19 impact, financial and ESG performance: Evidence from G20 countries

Amosh

Khatib

2023

“…As an essential cornerstone of economic development within a nation, the banking industry assumes a critical role in advancing sustainable development. By providing crucial financial services and facilitating responsible investment, banks contribute to the growth and stability of the economy while simultaneously fostering environmental and social progress (Alketbi et al, 2022). competenc*" OR "digital capabilit*" OR "digital skill*" AND "digital resource*" AND "banking customer*").…”

Section: Sustainable Financial Servicesmentioning

confidence: 99%

“…Conversely, the concept of digital integration pertains to the seamless amalgamation of digital technologies into various facets of daily life, such as business, healthcare, and education (Núñez‐Canal et al, 2022). This integration can increase efficiency, create new opportunities, and enhance access to information and services for vulnerable communities (Alketbi et al, 2022). However, digital integration also requires individuals to have the necessary digital competencies to use these technologies effectively.…”

Section: Literature Reviewmentioning

confidence: 99%

Adapting to the digital age: Investigating the frameworks for financial services in modern communities

Fundira,

Edoun,

Pradhan

2023

The digital age has brought about a revolution in the way we manage our finances, with more and more financial services moving online. However, not all communities have the same level of digital competency, leading to disparities in access to financial services. This study delves into the digital competencies' framework necessary for financial services to sustain vulnerable communities in the digital era. The COVID‐19 pandemic has accelerated the digital shift, leaving many communities struggling to adapt. The study aims to understand the challenges and opportunities presented by this shift, and how key stakeholders can support disadvantaged communities in developing their digital skills and accessing resources. The “Digital Financial Services Consumer Competency Framework” was identified as most appropriate for the study. Respective governments and other key stakeholders must assist with the development of digital hubs, from which vulnerable communities can access digital skills and resources. The research method used is a systematic literature review of 19 published papers, which were analyzed to generate statistics, visualization maps, and theories for the study. The findings of the study will be used to guide the development of policies to necessitate and encourage community ICT adoption.

“…The scope of modern disclosing (reporting) of information has expanded to encompass not only traditional financial data but also non‐financial information. Previous research established that financial performance (FP) is a crucial indicator of an organization's financial health and can be influenced by information disclosure policies (Alketbi et al, 2022; Bahadori et al, 2021; Balon, 2020; Hamdallah et al, 2021; Raghuvanshi & Agrawal, 2020; Sabău‐Popa et al, 2020). In particular, the disclosure of environmental, social, economic, and governance information identified significant attention in the academic fields.…”

Section: Introductionmentioning

confidence: 99%

The impact of green innovation on sustainability and financial performance: Evidence from the Jordanian financial sector

Srouji,

Hamdallah,

Al‐Hamadeen

et al. 2023

The purpose of this study is to examine the relationship between sustainability performance (SP) and financial performance (FP), based on performance disclosures (reporting) of the Jordanian financial sector for the period of 2017–2020. The study employs green innovation (GI) indicators as moderating and mediating variables; by using hierarchical regression; as means of unlocking and examining the relationship between SP and FP; through the lens of the stakeholder theory. The hierarchical regression findings suggest that GI indicators partially mediate the relationship between SP and FP, but do not demonstrate a moderating effect. As a main result, it is indicated that Jordanian financial institutions may use SP transparency indicators as an incentive variable, which could influence their overall FP. The research also contributes to the existing literature by adding insight into the use of GI indicators in a developing country and the potential impact on financial institutions markets. These findings lend empirical credence to the generally held belief that increase disclosure benefits for both internal and external users.